The Magic of the National Budget

Every year for the last thirteen years the South African Finance Minister, Trevor Manuel, has presented a Budget to Parliament. This follows the British pattern; the Budget is worked out by the Ministry of Finance and although it is presented to Parliament, Parliament has no say in changing it. However, unlike the British pattern, the South African Budget is known fairly well in advance, because it is calculated over a three-year period (what is called medium-term expenditure) and so there is not the kind of secrecy fetish which in Britain has Chancellors of the Exchequer photographed holding suitcases which allegedly contain the mighty secrets of wealth and power.

The Creator is in possession of two responses to the Budget for 2008, one from the Daily Dispatch and one from the Mail and Guardian. Both are special supplements to the newspaper. You can either assume that the Budget is such an important part of everyone’s annual ritual that it is worthwhile providing people with detailed information on it, or you can assume that consumerism has reached such a pitch that people are ready to make money out of the most insignificant pretext.

Take the Dispatch first. Its 8-page Budget special’s cover bears a portrait of Manuel holding his two spread hands out before him like a magician conjuring up something. The portrait overlays images of RDP houses and electricity pylons against the background of an African sunrise which all makes Trevor look a little like an airbrushed Chairman Mao. This illustrates the news that the budget for the Eastern Cape increases to R35,9 billion, an increase of R7,5 billion, meaning that the previous budget was R28,4 billion, meaning a 26% increase. (18% allowing for 8% inflation.) However, a great deal of this seems to be expenditure on issues related to the Coega industrial development project around the Ngqura harbour, so the increase will not mean a 26% increase on all expenditure.

Then we are told there is to be R35,8 billion spent on housing over the next three years; there is the acknowledgement that 2,4 million homes need to be built (approximately what has been done in the past 13 years) and meanwhile R2,2 billion is to be spent on “upgrading informal settlements” — presumably, providing shanty-towns with amenities like toilets, water-taps and electricity connections. The 2007-8 house-building target was 220 000, meaning a 10% increase in the rate of building under the 1994-9 RDP, although the population is up and the economy has grown by considerably more than 10%. In 2010/11 this is supposed to increase to 265 000, which, if it is met, is a little more like it. However, the Minister of Housing has argued that the rate needs to be doubled.

Manuel admitted that the price of a bag of mealie meal had increased by 35% in 2007-8, but resolved to do nothing about this. An article on education revealed that per-pupil education spending in the province was R554.

Safety and Security, a perennial problem, rose by about 10% (i.e. 2%) from R36 billion to R40 billion. It was expected to rise to R49 billion by the 2010 budget — that is, increases were expected to stay much the same.

Only then did the page come which dealt with tax cuts which “keeps public smiling” — that is, the part of the public which pays taxes was happier. The article, by the newspaper’s Business Editor, revealed that R7,2 billion would go in tax breaks for what were called “salaried workers” — about 33% of this money would be returned to those earning below R150 000 a year (about five times the national average wage). 28% went to those earning between R150 000 to R250 000 a year (five to eight times the national average). Presumably, the remaining 38% of tax breaks went to those earning more than R250 000 a year, meaning that the breaks were extremely regressive, but the writer wisely did not mention this. Admittedly, no tax would be paid by those earning R46 000 or less. Corporate tax went down from 29% to 28%, a 3,4% cut which, the author said, would somehow lower the cost of capital for new investment. (If the company did no investment, it was presumably extra Mercedeses all around the boardroom.) Exchange controls for “institutional investors” (which sounds like a big break for loonies) were completely eliminated and the “rand futures market” opened up — which sounds in the real world like a big generous hand for capital flight and speculative traders.

Manuel attempted to make the Public Works Programme sound more impressive by talking about “a further R1 billion over the period ahead”, and the newspaper fell for this. However, the actual increase was from R3,7 billion to R4,1 billion, an increase of just under 11%, or 3% really. The sleight of hand was undertaken by confusing the medium-term budget with the annual budget, and for the reason that public works are popular, so hiding the fact that the programme absorbed only a tenth of the police budget was a good idea.

HIV spending, oddly, was around R2,2 billion, although it was supposed to be R6,5 billion by 2010. This did not make much sense. The Eastern Cape alone was getting R2,1 billion over the next three years. However, according to Manual 418 000 people (or about 0,8% of the population) were currently on antiretrovirals, with another 500 000 scheduled to come in later). So while the figures did not add up (probably because the newspaper was confused) the data was at least reassuring.

The rest of the supplement — two pages — dealt with political speculation that Manuel might be fired by Zuma, and with denunciations of the Budget, mostly by the SA Municipal Workers’ Union, who felt that it was a rich person’s budget (which was not totally unfair), by the DA (which felt that the Budget was unfair to the rich, which was ridiculous) and, best of all, by the Tobacco Institute of South Africa, which felt that the Budget was unfair to lung cancer promotors.

So this supplement, while often fooled by the complexities of the Budget (or perhaps willingly participating in the fooling) did at least manage to tell us something worthwhile. But note an absence: no table telling us how much was spent or what proportion of the Budget was spent on what. Well, what can you expect from a small-town paper? Better, one would think.

One would think that the Mail and Guardian‘s 12-page budget special should be 50% better than the Daily Dispatch.

However. On the cover is a small photo of Manuel (no gigantic pylons dominating the rosy skyline) and articles talking about “chin up” and “holding the line” against the Deputy Minister for Trade and Industry who wants a genuine trade and industry policy which would actually promote manufacturing. (Well, we can’t have that!) Another article, also on the cover, asks if Manuel is to be sacked or not, and another compares him with Barack Obama, the US Presidential candidate (which is an insult to Manuel on a par with dumping a bucket of diarrhoea over his suit).

Praise for spending on education, where spending rises from R105 billion to R121 billion, an increase of 15% (7% really). Higher education gets a rise from R13,3 billion to R15 billion, an increase of 13% (5% really), so once again, a lower slice of the budget (from 12,7% of the budget to 12,4%). Health-care increase was not mentioned in the article on health care budgeting, because the article was written by Belinda Beresford who does not approve of the government. She did — unprecedentedly — mention that the government had an antiretroviral policy. (Incidentally, she quoted the entire provincial budget allocation, possibly thinking that this was about health care.)

The next page saw some criticism of the Budget — naturally, from a financier from Metropolitan Asset Management, who didn’t like the tax levy aimed at raising money for electricity generation (no doubt financiers can more easily pick peoples’ pockets in the dark). In fairness, she also complained about the static level of social grant spending, and she pointed out, as the Dispatch didn’t, that the tax breaks tended to go to the rich.

The section on transport did not say what was being budgeted for transport, although it wittered about various cities spending loads over the medium term. However, on the next page the Minerals and Energy section revealed that R8,2 billion would be spent. The claim was that the energy budget would be “greener”, a concept which the Mail and Guardian, a great greenwasher, lives. Again, there was no mention of what the Minerals and Energy budget actually was.

Then came the page dealing with what the budget means for you. The author said that those earning less than R46 000 a year would not be taxed, which was true, and that this saved “R540 a year”, which was false. Those earning R100 000 a year saved R540 a year (0,54%), whereas those earning R200 000 a year saved R1 955 a year (0,97%) and those earning R500 000 a year saved R4 655 a year (0,93%). So richer people got roughly double the tax break that poorer people got. That was helpful, though the page didn’t put it like that. The corporate tax break was described as a “welcome relief” which “put R5 billion back into corporate profits”, which at least helps explain what the author’s agenda was. The author admitted that individuals pay 40% while companies pay 28%. (Very interesting, that the Mail and Guardian journalist was more enthusiastic about capitalist inequality than the financier was!) On the next page, an article explained that all restraints on mining companies encouraged mining companies to go elsewhere, so there should be no such restraints.

Thereafter came a page on defense spending, claiming that an average 6,1% increase over the next three years was in line with inflation (actually 2% lower than inflation, so this meant regular cuts) — and the article did not mention what defense spending was.

After an advertisement came a page on the ending of exchange control, saying that it was a positive message (for whom, not stated) and also that it would not encourage foreign investors (who would expect more from the government). The author said, with apparent pleasure, that more money would flow out of the country. Another article complained that child support grants were too low (but did not say how much was spent on them) whereas an article in land reform noted that the spending on land reform went up from R4 billion to R6,6 billion (a 65% increase).

Another article explained a 16% (8% in real terms) increase in provincial spending, up to R238 billion, giving a breakdown of what each province got, and — that was it.

So the remarkable point here is that the “quality weekly” did not provide significantly more information than the small-town daily. Another remarkable point, however, is that neither newspaper provided an actual breakdown of the 2008 budget and how significantly, if at all, it differed from the 2008 budget. It’s as if readers are really not intended to see the forest; we are all supposed to gaze in awestruck wonderment at all those beautiful trees. Conventional news comment was restricted to how much the tax cuts were and how much more people were paying for beer and cigarettes. Apparently this is all that the rest of us are supposed to care about.

And a favourite complaint from press and politicians combined is that the public doesn’t get involved enough in real issues . . .

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